Industrial cluster relocation: cluster formation, development and technological change in the destination region

This dissertation presents the first systematic study on cluster relocation, providing a non- random and dynamic analysis of firm relocations. Seeking to contribute to the understanding of cluster relocations and their consequences for the destination region, I explore the process and determinants of a particular cluster relocation and investigate the growth and maintenance of the new cluster through the enhancement of its supplier base, the diffusion of innovations, and advances in technological change. I analyse the differences between first and late mover firms in the process of cluster relocation to unveil the elements that boost relocation. I examine the process of technological change that occurs in the destination region. On one hand, I explore the channels for the diffusion of specific innovations and provide novel evidence for the cluster literature by considering different channels simultaneously. I measure the importance of local and relocated firms for the diffusion of innovations, unveiling the mechanisms by which knowledge spillovers with and among local firms take place. On the other hand, I present a dynamic view of the impact of relocated firms in the new region, providing unique details of technological change and the build-up of absorptive capacity over time. I analyse the changing role of relocated firms in the creation and expansion of local firms’ capabilities. The relocation of the Sinos Valley footwear cluster in Brazil is analysed as a case study in this research. After being defined as a 'supercluster' by Schmitz (1995), the cluster collapsed and partially relocated in the end of the 1990s to the northeast of Brazil, and to China, following major changes that affected the competitiveness of the sector. In their attempt to survive, several firms relocated to the Cariri area in the state of Ceará, northeast Brazil. I follow this relocation process using mapping techniques, analysing the diffusion of innovations and technological change processes through an extensive set of interviews and a complete social network analysis.